Distribution

Legal alcohol shipping? Congresswoman Jackie Speier of California says she’ll introduce a bill that just might make it so. Announced through her Facebook page on July 14, 2015, Congresswoman Speier would like to “tear down the last vestiges of #Prohibition” by introducing a bill that will undoubtedly be unpopular with craft beverage fans across the United States. The bill would make it legal for consumers to ship alcohol through the United States Post Office, “expanding consumer choice and keeping the Post Office solvent in the process,” according to Congresswoman Speier.

For those out of the loop, it’s currently illegal to ship alcohol through the US Mail. It’s also not okay through third-party carriers such as FedEx and UPS, although violating their rules is not as risky as the USPS’s. For example, violators of the United States Post Office alcohol shipping prohibition technically “shall be fined . . . or imprisoned not more than one year, or both.”

For the curious, the ban on shipping alcohol through the United States Postal Service stems back to 18 U.S.C. § 1716, a federal statute that came on the books back in 1909. The statute provides that “[a]ll spiritous, vinous, malted, fermented, or other intoxicating liquors of any kind are nonmailable and shall not be deposited in or carried through the mails.” Pretty straightforward.

Opening up beer and wine shipping through US Mail won’t be without its administrative challenges, but former Postmaster General Donahoe thought they were surmountable. For example, there are issues with shipping out of and into various states (some states allow it, some do not), and further issues with preventing delivery to those underage.

With interest in craft beverages at an all-time high, this may just be the time for a bill like this to make it through. Keep in mind, however, that secondary markets, from a consumer-to-consumer sales perspective, would still be illegal—and bartering or trading could still be deemed a sale of alcohol, prohibited under many state laws. Shipping of gifts back and forth to your buddies in different parts of the United States, however, may pass muster. So, perhaps it’s a good time to warm back up to your old college friends who may be scattered about the US, and living nearby your favorite hard-to-find source. We’ll keep you posted.

When does your carefully crafted brew require a TTB formula approval? It’s not as straightforward as you might hope. Read on for important background on TTB formula approval requirements.

Government authorities are great at drawing confusing lines. One example is understanding what beers need a TTB formula approval. (Note that TTB, or the Alcohol and Tobacco Tax and Trade Bureau, is the primary federal regulatory authority over alcoholic beverages and producers.) Before getting to the question of which beers require TTB formula approvals, it helps to cover some background material, and the necessary rigmarole it takes to get one. What are they, what beers need them, when do you apply, how long does it take? Read on and we’ll roll through it.

What is a TTB formula approval?

When brewing certain kinds of beer with certain ingredients and processes, TTB requires that the agency first approve your formula (your recipe / process essentially) before it will consider your beer for a Certificate of Label Approval (COLA). That process is commonly referred to as a TTB formula approval. This is required for a range of beers, as we’ll cover soon.

When do I seek TTB formula approval?

The time to seek formula approval is when you’re planning to package and distribute a product across state lines. That’s when you’d need to get something else, called a Certificate of Label Approval (which authorizes you to move that beer across state lines). The formula approval is a prerequisite to the COLA for beers that need it. Here’s another scenario that’s important to know. If your state requires a COLA before packaging and selling your product even within the state, then you’ll need to go through the formula-approval process first. (Submitting your TTB COLA label approvals is technically required by the Washington State Liquor Control Board, for example, so you’d need your (1) TTB formula approval and then (2) TTB COLA label approval, before you have authority to sell packaged product in the state).

How long does it take to get a TTB formula approval?

TTB does a great job, but it’s not as fast as getting your COLA. You can view average TTB formula approval processing times at this website. At the time of writing, it’s taking TTB about 53 days (so almost two months) to issues its formula approvals. In part, TTB’s backlog is due to the increase in number of producers and, thereby, the beers hitting the market and crossing state lines. Sneak preview, though…Based on statements from TTB correspondents at the Craft Brewers Conference this year, they’d like to see the number of required formula approvals go down, and may be easing requirements even more, letting more beers through the gate without requiring approvals first. We’ll touch on that in a second. In any event, you will want to budget this time when planning to release any beer to market that requires a formula approval. And then you’ll want to keep in mind that, after the formula approval, it’s going to take some time to get your COLA as well. (Current TTB COLA approval wait times here. Battle Martin does a fantastic job getting through these. Yes, it’s one guy at TTB who does every beer label, and he’s refreshingly also most awesome to hear speak and to deal with.)

Which beers require a TTB formula approval?

Well, let’s be glad not all of them do. But, the line drawing here doesn’t make the most sense. TTB requires formula approval for any beer that is made using nontraditional processes. If you’re brewing up a traditional recipe, this doesn’t need to be on your radar. Water, malt, hops, and yeast? No worries. It does, however, come into play when you start using adjuncts or creative processes.

As a general rule, the kinds of beer recipes listed below require a TTB formula approval. However, there are very important exceptions to this rule which I’ll cover below.

To which flavors or other nonbeverage ingredients (other than hops extract) containing alcohol will be added;
To which coloring or natural or artificial flavors will be added;
To which fruit, fruit juice, fruit concentrate, herbs, spices, honey, maple syrup, or other food materials will be added; or
That is designated as saké, including flavored saké and sparkling saké.

Which beers are exempt from the general TTB formula approval rule?

Here’s a list of the exempt ingredients below (thanks to a ruling in 2014 relaxing the standards). This list came from urging by the Brewers Association, wanting to relax the onerous approval requirements for beer ingredients and processes that really were traditional. As you peruse the list, you’ll see that certain fruit additions are okay…but not others, at least right now. For example, coconut doesn’t make the cut. So if you’re using coconut in any beer, you need a TTB formula approval. Moreover, a multitude of spices got the green light, but if you’re using something creative like lemongrass in your wheat, it’s not going to pass muster. Last, and fortunately, ingredients like brown sugar, chocolate, coffee beans and grounds, honey, lactose, maple syrup, and the like are all okay. But, notably, if you’re brewing a batch of coffee and then using that brewed coffee in your beer process, that is not okay. Just the beans or grounds. Hmm.

The below processes are also exempt. As you review the list, keep in mind that you can use woodchips (remember, though, you can’t say it’s a barrel-aged beer then or say on its label that it has barrel flavor, that gets to labeling issues), but you can’t soak those woodchips in alcohol.

Aging beer in plain barrels or with plain woodchips, spirals or staves made of any type of wood.

Aging beer in barrels, containing no discernible quantity of wine or distilled spirits, that were previously used in the production or storage of wine or distilled spirits.

Aging beer with woodchips, spirals or staves derived from barrels, containing no discernible quantity of wine or distilled spirits, that were previously used in the production or storage of wine or distilled spirits, or with woodchips, containing no discernible quantity of wine or distilled spirits, that were previously used in the aging of wine or distilled spirits.

In Conclusion, TTB Formula Approval: Moving Forward

Ultimately, based on comments from TTB authorities who attended the 2015 Craft Brewers Conference in Portland, TTB seems to be revisiting further ingredients / processes to include on the list. We’re hoping coconut and a multitude of other now-traditional ingredients make the cut. We’ll include them in a post whenever we get word. But, for now, as you make plans to expand into other territories, keep in mind that the COLA isn’t the first step for many of your creative beers. Instead, it’s TTB formula approval, then the important step of TTB COLA approval. Forgetting this, or doing them out of order, can add significant delays to your beer’s release time. If you have questions or concerns about your upcoming COLA or TTB formula approval needs, Doug and I can help, no matter where in the U.S. your brewery is located. Feel free to send us a note.

Here’s a different scenario. Imagine your beer name itself is distributable. It isn’t misleading. It’s not touting the effects of alcohol. It’s not appealing to kids. Now, if the label has subjectively “racy” content, we know the First Amendment is going to kick in and protect that brewery’s speech on the label. See my post last week on the case of Flying Dog and its Raging Bitch beer label, which caused a bit of a stir with Michigan’s Liquor Control Commission, which had initially (and improperly) rejected the label, contrary to Flying Dog Brewery’s First Amendment rights.

Could it be that the reverse is also true? That is, can you have a distributable beer label or brand that is not trademarkable? Indeed. The United States Patent and Trademark Office (USPTO) operates under the framework of the Lanham Act. Bear in mind that within the Lanham Act, USPTO is to refuse a mark that “[c]onsists of or comprises immoral, deceptive, or scandalous matter . . . .” There are a few other grounds for refusal, outlined in 15 U.S.C. § 1052. In fact, readers might be aware of the ongoing matter involving the registrability of “Redskins.”

So, you might say, wait a minute. If the First Amendment protects the government from restricting labels with subjectively scandalous content, then how can USPTO refuse registrations on this sort of ground? You might wonder, can USPTO, the Trademark Trial and Appeal Board (TTAB), and courts applying the law really do this, without affronting First Amendment rights? So far, they can. The distinction is that, by not granting a federal trademark, the government has not prevented the party’s use of the mark. You can speak on. The use would just not be granted the presumptions and protections connected with a federal trademark. A great case on point here was the matter of 1-800-JACK-OFF, a trademark sought for services it doesn’t take much imagination to determine.

So, in sum, some trademarkable beer names are not distributable. In the reverse, some distributable beer names are trademarkable. In the case of Flying Dog Brewery, however, they do have a trademark for their “Raging Bitch” brand of brew. In fact, I was surprised to see just how crowded the field of “Bitch” marks is on alcohol beverages. Among them, we have the pure and simple “BITCH” mark, as well as a battery of marks from different owners, with most of these bitches seeming to favor wine brands. You’ll find “HAPPY BITCH” but also “CRAZY BITCH”, “NASTY BITCH”, the nautical-themed “BEACH BITCH” and then “JEALOUS BITCH”, though that “RICH BITCH” is no longer protected.

At any rate, when developing a standout product for a brewery or beverage business, it can be fun to push the boundaries with creative ingredients and processes. To match the brew’s personality or create some pop on a crowded taplist or retail shelf, it can also be tempting to push the boundaries with the brand material itself. The First Amendment does kick in to protect a brewery’s speech on its labels, allowing all kinds of vulgar things to potentially come to market. Thanks, Bill of Rights! Nevertheless, so far, to develop a brand under the protections of a federal trademark, you’ll have to keep it a bit cleaner. In fairness, although it’s still a subjective call at the end of the day, the powers that be who review trademarks take a pretty measured approach in determining whether a mark warrants refusal for these reasons under the Lanham Act. Still, for any brand owner or marketer, it’s important to know the line exists.

It’s easier—and can be more affordable—than you might think to start a brewery in Washington state.

This post is for the dreamers—those who want to open a brewery, without giving up their primary careers just yet. I’m here to say it’s possible—promising, even. So, here are my thoughts on how you can invest in yourself. You can open up a brewery the easy and affordable way, without sinking cash into mega start-up costs. Here’s how.

Before fully digging in, I’ll note that it’s the holiday season. Time with family, especially over some special brews and beverages, can refocus us all, and for anyone with an entrepreneurial streak, that refocusing can resurface dreams of a family-owned business—something to support those closest to you now, and well into the future. And, for many of us homebrewers, that dream usually involves a homegrown brewery, cidery, meadery, or distillery.

If you’re just exploring the idea, or you’ve been batting it around for a bit and don’t know where to start, it’s worth noting that a brewery start-up can take so many different kinds of forms. But, for many of us, the prospect of leaving one career to jump into a less-certain other can make the dream seem too risky. For others, the start-up costs or investment obstacles alone can make the dream seem too impossible. Today, though, this post is all about the possible.

One of the most affordable, least risky, and easiest ways to open a brewery is to open a brewery…without opening a brewery. Rather than invest in a massive system, long-term lease, and take on full-time brewing from the get-go, clever potential brewery owners can get some brews on the market without too much skin in the game. We’ve covered these sorts of contract brewing and alternating proprietorship arrangements in the past, back in 2011. But, it’s worth revisiting now, as it’s an underutilized option to get brewing. These arrangements are legal from TTB’s perspective, and in a number of states, including Washington. It’s the real deal. For those in Washington, there’s more background on contract brewing here, here, and here, and helpful information on alternating proprietorships here.

The gist of an alternating proprietorship is, you’d be getting licensed up, but rather than outfitting your own start-up brewery, you’d be opening a brewery as a “tenant” brewer from time to time at another commercial brewery. You’d bottle into your own bottles or keg into your own kegs, with your own label approvals, and you’d be completely in control of your inventory. You just wouldn’t have to invest in the space from the start. It’s sort of like a tool lending library, on the massive brewing scale. In contrast, contract brewing arrangements allow you to contract with an existing brewery and have them responsible for making the beer for you. You can craft the recipe, but they’d be the licensed parties brewing it up.

So, for those of you wanting to get your feet wet in the brewing business, without getting underwater, alternating proprietorships and contract brewing arrangements are real possibilities, and Reiser Legal or your local beer attorney is available to help new brewery owners open a brewery, test out the market, get their goods out there, and make cash to reinvest into the future brewery, without putting your primary career on hold. Of course, having said all of that, it costs a lot less than you’d think to start up a nano brewery, and there are many investors eager to be a part of the fun. See our post on brewery start-up costs here. But, if you’re not sure about the “wheres” of your commercial facility, and don’t want to plant deep roots just yet, contract brewing or alternating proprietorships are a viable option, and we’re here to help you get started.

So, you’re ready to package. Awesome. What should be top of mind when preparing a Washington-ready beer label? There are a few things to note but, in general, compliance with TTB regulations will get you close to compliant with LCB. However, there are some extra Washington laws and regs to keep in mind.

If a Washington brewery is ready to package and sell—or an out-of-state brewery is interested in beer distribution in the State of Washington—there are certain labeling requirements set forth by the Washington legislature and the Washington Liquor Control Board (LCB). Fortunately, the beer labeling requirements are not particularly cumbersome. Notably, LCB’s direct label approval is not required. However, LCB does require that in-state breweries and out-of-state breweries alike obtain a federally approved label, known as a Certificate of Label Approval (COLA) before getting beer on the shelves. To be ready to ship or distribute beer in Washington, the producer must submit a copy of the federal COLA to LCB and, it goes without saying, have proper licensure. If a brewery makes changes that require a new label approval from TTB, the brewery likewise will have to submit that new label to LCB.

As for Washington’s own beer-labeling requirements, if a brewery is complying with federal regulations, the brewery is likely to be okay under LCB’s approach. However, the LCB does reserve the right to deny any label that doesn’t conform to their basic requirements and rules. What are those? Things you’d expect, and things that the Alcohol and Tobacco Tax and Trade Bureau (TTB) mostly already requires (though LCB and TTB may disagree about some subjective calls). No label can be misleading, you can’t make labels that especially appeal to children, and if you’re going to show adults on the label, the depiction has to be dignified and can’t promote illegal consumption of liquor. There are some other ones, so be sure to review the relevant regs and statutes, or shoot the proposed label to your beer lawyer for a quick review before submission.

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